text
stringlengths 0
1.95M
|
|---|
to change their names to remove any reference to the term “1847” or any reference to trademarks licensed to them by our manager. |
In this respect, our right to use the term “1847” and related intellectual property is subject to licensing provisions between |
our manager, on the one hand, and our company, on the other hand. Except with respect to the termination fee payable |
to our manager due to a termination of the management services agreement based solely on a vote of our board of directors and our shareholders, |
no other termination fee is payable upon termination of the management services agreement for any other reason. See “ —Our |
Manager as a Service Provider—Termination Fee ” for more information about the termination fee payable upon termination |
of the management services agreement. While termination of the management services agreement |
will not affect any terms and conditions, including those relating to any payment obligations, that exist under any offsetting management |
services agreements or transaction services agreements, such agreements will be terminable by our businesses upon 60 days prior written |
notice and there will be no termination or other similar fees due upon such termination. Notwithstanding termination of the management |
services agreement, our manager will maintain its rights with respect to the allocation shares it then owns, including its rights under |
the supplemental put provision of our operating agreement. See “ —Our Manager as an Equity Holder—Supplemental Put |
Provision ” for more information on our manager’s put right with respect to the allocation shares. 13 Our Relationship with Our Manager, Manager |
Fees and Manager Profit Allocation Our relationship with our manager is based on |
our manager having two distinct rol first, as a service provider to us and, second, as an equity holder of the allocation shares. As a service provider, our manager performs a |
variety of services for us, which entitles it to receive a management fee. As holder of our allocation shares, our manager has the right |
to a preferred distribution in the form of a profit allocation upon the occurrence of certain events. Our manager paid $1,000 for the |
allocation shares. In addition, our manager will have the right to cause us to purchase the allocation shares then owned by our manager |
upon termination of the management services agreement. These relationships with our manager are governed |
principally by the following agreements: ● the management services agreements relating to the services our manager performs for us and our businesses; |
and ● our operating agreement relating to our manager’s rights with respect to the allocation shares it |
owns and which contains the supplemental put provision relating to our manager’s right to cause us to purchase the allocation shares |
it owns. We also expect that our manager will enter into |
offsetting management services agreements and transaction services agreements with our businesses directly. These agreements, and some |
of the material terms relating thereto, are discussed in more detail below. The management fee, profit allocation and put price under |
the supplemental put provision will be our payment obligations and, as a result, will be paid, along with other company obligations, prior |
to the payment of distributions to common shareholders. The following table provides a simplified description |
of the fees and profit allocation rights held by our manager. Further detail is provided in the following subsections. Description Fee Calculation Payment Term Management Fees Determined by management services agreement 0.5% of adjusted net assets (2.0% annually) Quarterly Determined by offsetting management services agreement Payment of fees by our subsidiary businesses that result in a dollar for dollar reduction of manager fees paid by us to our manager such that our manager cannot receive duplicate fees from both us and our subsidiary Quarterly Termination fee – determined by management services agreement Accumulated management fee paid in the preceding 4 fiscal quarters multiplied by 2. Paid only upon termination by our board and a majority in interest of our shareholders Determined by management services agreement Reimbursement of manager’s costs and expenses in providing services to us, but not includin (1) costs of overhead; (2) due diligence and other costs for potential acquisitions our board of directors does not approve pursuing or that are required by acquisition target to be reimbursed under a transaction services agreement; and (3) certain seconded officers and employees Ongoing Transaction Services Fees Acquisition services of target businesses or disposition of subsidiaries – fees determined by transaction services agreements 2.0% of aggregate purchase price up to $50 million; plus 1.5% of aggregate purchase price in excess of $50 million and up to and equal to $100 million; plus 1.0% of aggregate purchase price in excess of $100 million Per transaction Manager profit allocation determined by our operating agreement 20% of certain profits and gains on a sale |
of subsidiary after clearance of the 8% annual hurdle rate 8% hurdle rate determined for any subsidiary |
by multiplying the subsidiary’s average quarterly share of our assets by an 8% annualized rate Sale of a material amount of capital stock |
or assets of one of our businesses or subsidiaries. Holding even at the option of our manager, |
for the 30 day period following the 5th anniversary of an acquired business (but only based on historical profits of the business) 14 Our Manager as a Service Provider Management Fee We will pay our manager a quarterly management |
fee equal to 0.5% (2.0% annualized) of its adjusted net assets, as discussed in more detail below (which we refer to as the parent management |
fee). Subject to any adjustments discussed below, for |
performing management services under the management services agreement during any fiscal quarter, we will pay our manager a management |
fee with respect to such fiscal quarter. The management fee to be paid with respect to any fiscal quarter will be calculated as of the |
last day of such fiscal quarter, which we refer to as the calculation date. The management fee will be calculated by an administrator, |
which will be our manager so long as the management services agreement is in effect. The amount of any management fee payable by us as |
of any calculation date with respect to any fiscal quarter will be (i) reduced by the aggregate amount of any offsetting management fees, |
if any, received by our manager from any of our businesses with respect to such fiscal quarter, (ii) reduced (or increased) by the amount |
of any over-paid (or under-paid) management fees received by (or owed to) our manager as of such calculation date, and (iii) increased |
by the amount of any outstanding accrued and unpaid management fees. The management fee will be paid prior to the payment |
of distributions to our common shareholders. If we do not have sufficient liquid assets to pay the management fee when due, we may be |
required to liquidate assets or incur debt in order to pay the management fee. Offsetting Management Services Agreements Pursuant to the management services agreement, |
we have agreed that our manager may, at any time, enter into offsetting management services agreements with our businesses pursuant to |
which our manager may perform services that may or may not be similar to management services. Any fees to be paid by one of our businesses |
pursuant to such agreements are referred to as offsetting management fees and will offset, on a dollar-for-dollar basis, the management |
fee otherwise due and payable by us under the management services agreement with respect to a fiscal quarter. The management services |
agreement provides that the aggregate amount of offsetting management fees to be paid to our manager with respect to any fiscal quarter |
shall not exceed the management fee to be paid to our manager with respect to such fiscal quarter. Our manager entered into offsetting management |
services agreements with 1847 Asien, 1847 Cabinet, 1847 Wolo and 1847 ICU. See Item 7 “ Management’s Discussion and Analysis |
of Financial Condition and Results of Operations—Management Fees ” for a description of these agreements. Our manager may |
also enter into offsetting management services agreements with our future subsidiaries, which agreements would be in the form prescribed |
by our management services agreement. The offsetting management fee paid to our manager for providing management services to a future |
subsidiary will vary. 15 The services that our manager provides under the |
offsetting management services agreements inclu conducting general and administrative supervision and oversight of the subsidiary’s |
day-to-day business and operations, including, but not limited to, recruiting and hiring of personnel, administration of personnel and |
personnel benefits, development of administrative policies and procedures, establishment and management of banking services, managing |
and arranging for the maintaining of liability insurance, arranging for equipment rental, maintenance of all necessary permits and licenses, |
acquisition of any additional licenses and permits that become necessary, participation in risk management policies and procedures; and |
overseeing and consulting with respect to our business and operational strategies, the implementation of such strategies and the evaluation |
of such strategies, including, but not limited to, strategies with respect to capital expenditure and expansion programs, acquisitions |
or dispositions and product or service lines. If our manager and the subsidiary do not enter into an offsetting management services agreement, |
our manager will provide these services for our subsidiaries under our management services agreement. Example of Calculation of Management Fee |
with Adjustment for Offsetting Management Fees In order to better understand how the management |
fee is calculated, we are providing the following examp Quarterly management fee: (in thousands) 1 Consolidated total assets $ 100,000 2 Consolidated accumulation amortization of intangibles 5,000 3 Total cash and cash equivalents 5,000 4 Adjusted total liabilities (10,000 ) 5 Adjusted net assets (Line 1 + Line 2 – Line 3 – Line 4) 90,000 6 Multiplied by quarterly rate 0.5 % 7 Quarterly management fee $ 450 Offsetting management fe 8 Acquired company A offsetting management fees $ (100 ) 9 Acquired company B offsetting management fees (100 ) 10 Acquired company C offsetting management fees (100 ) 11 Acquired company D offsetting management fees (100 ) 12 Total offsetting management fees (Line 8 + Line 9 – Line 10 – Line 11) (400 ) 13 Quarterly management fee payable by Company (Line 7 + Line 12) $ 50 The foregoing example provides hypothetical information |
only and does not intend to reflect actual or expected management fee amounts. For purposes of the calculation of the management |
fee: ● “Adjusted net assets” will be equal to, as of any calculation date, the sum of (i) our consolidated |
total assets (as determined in accordance with U.S. generally accepted accounting principles, or GAAP) as of such calculation date, plus |
(ii) the absolute amount of our consolidated accumulated amortization of intangibles (as determined in accordance with GAAP) as of such |
calculation date, minus (iii) total cash and cash equivalents, minus (iv) the absolute amount of our adjusted total liabilities as of |
such calculation date. ● “Adjusted total liabilities” will be equal to, as of any calculation date, our consolidated |
total liabilities (as determined in accordance with GAAP) as of such calculation date after excluding the effect of any outstanding third-party |
indebtedness. ● “Quarterly management fee” will be equal to, as of any calculation date, the product of (i) |
0.5%, multiplied by (ii) our adjusted net assets as of such calculation date; provided, however, that with respect to any fiscal quarter |
in which the management services agreement is terminated, we will pay our manager a management fee with respect to such fiscal quarter |
equal to the product of (i)(x) 0.5%, multiplied by (y) our adjusted net assets as of such calculation date, multiplied by (ii) a fraction, |
the numerator of which is the number of days from and including the first day of such fiscal quarter to but excluding the date upon which |
the management services agreement is terminated and the denominator of which is the number of days in such fiscal quarter. ● “Total offsetting management fees” will be equal to, as of any calculation date, fees paid |
to our manager by the businesses that we acquire in the future under separate offsetting management services agreements. 16 Transaction Services Agreements Pursuant to the management services agreement, |
we have agreed that our manager may, at any time, enter into transaction services agreements with any of our businesses relating to the |
performance by our manager of certain transaction-related services in connection with the acquisitions of target businesses by us or dispositions |
of our property or assets. These services may include those customarily performed by a third-party investment banking firm or similar |
financial advisor, which may or may not be similar to management services, in connection with the acquisition of target businesses by |
us or our subsidiaries or disposition of subsidiaries or any of our property or assets or those of our subsidiaries. In connection with |
providing transaction services, our manager will generally receive a fee equal to the sum of (i) 2.0% of the aggregate purchase price |
of the target business up to and equal to $50 million, plus (ii) 1.5% of the aggregate purchase price of the target business in excess |
of $50 million and up to and equal to $100 million, plus (iii) 1.0% of the aggregate purchase price over $100 million, subject to annual |
review by our board of directors. The purchase price of a target business shall be defined as the aggregate amount of consideration, including |
cash and the value of any shares issued by us on the date of acquisition, paid for the equity interests of such target business plus the |
aggregate principal amount of any debt assumed by us of the target business on the date of acquisition or any similar formulation. The |
other terms and conditions relating to the performance of transaction services will be established in accordance with market practice. Our manager may enter into transaction services |
agreements with our subsidiaries and future subsidiaries, which agreements would be in the form prescribed by our management services |
agreement. The services that our manager will provide to |
our subsidiaries and future subsidiaries under the transaction services agreements will include the following services that would be provided |
in connection with a specific transaction identified at the time that the transaction services agreement is entered int reviewing, evaluating |
and otherwise familiarizing itself and its affiliates with the business, operations, properties, financial condition and prospects of |
the future subsidiary and its target acquisition and preparing documentation describing the future subsidiary’s operations, management, |
historical financial results, projected financial results and any other relevant matters and presenting such documentation and making |
recommendations with respect thereto to certain of our manager’s affiliates. Any fees received by our manager pursuant to such |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.